Italy to pay up to 17 bln euros to deal with two troubled banks: Gov't

Italy will pay up to 17 billion euros ($19 billion) to break up two insolvent Venetian banks, which have posed a threat to the country's banking system, the government announced on June 25.

Both face bankruptcy and European authorities had urged Italy to devise a rescue framework, selling off the good assets of the stricken Banca Popolare di Vicenza and Veneto Banca and transferring their toxic assets to a "bad bank," essentially financed by Rome.

The move comes less than a month after the EU anti-trust authority approved Italy's massive rescue of the country's troubled third-largest bank, Monte dei Paschi di Siena (BMPS), which has been in deep trouble since the worst of the eurozone debt crisis.    
 
The Italian government will stage the two Venetian banks' rescue with support from the country's biggest retail bank, Intesa Sanpaolo, which will take up the good assets to protect the banks' customers and to minimize staff lay-offs.

The European Commission in a statement said it "has approved, under EU rules, Italian measures to facilitate the liquidation of BPVI and Veneto Banca under national insolvency law".

EU competition commissioner Margrethe Vestager said that Italy considers state aid necessary "to avoid an economic disturbance in the Veneto region."

She added that "Italy will support the sale and integration of some activities and the transfer of employees to Intesa Sanpaolo".

Padoan said 4,785 billion euros would be set aside immediately to "maintain capitalization" of Intesa Sanpaolo, which has made that a condition of any cooperation.

For its part Intesa has put one symbolic euro on the table and attached a further string to the deal by insisting its share dividend policy remain...